Paying VAT

[SimonMac]

I got my Cert of Registration for VAT and on it it has my first period ending 31/05, but it doesn't say how long I have to make the payment, I am going flat rate so it shouldn't take me too long to work out what I owe but I want to take in to consideration how long it takes for the payment to clear with HMRC, or does "the clock stop" when I amke the payment through the online facility and have th reference number?

Also just a clarification, I assume that I calculate based on amounts recived during a period rather than just invoiced? For example if I send an invoice to an agent on the 28th May and they pay the funds on the 2nd June, that payment will be in the 2nd period?

[Clare@InTouch]

The VAT return has to be submitted and paid a month and 7 days after the end of the quarter - so for 31st May the deadline is 7th July. Go really careful with the payment though as it has to clear their bank by the 7th and they don't have a faster payment system in place, so leave three working days before the 7th for it to clear. You can set up a DD and they'll take it around the 10th.

You can either be cash based or invoice based. On cash based you pay VAT on the invoices you've recieved. On invoice based you pay on invoices you've raised, whether they have been paid or not. You can use either, but you must be consistent.

Make sure you take account of the 1% discount under the FRS too.

[SimonMac]

The VAT return has to be submitted and paid a month and 7 days after the end of the quarter - so for 31st May the deadline is 7th July. Go really careful with the payment though as it has to clear their bank by the 7th and they don't have a faster payment system in place, so leave three working days before the 7th for it to clear. You can set up a DD and they'll take it around the 10th.

You can either be cash based or invoice based. On cash based you pay VAT on the invoices you've recieved. On invoice based you pay on invoices you've raised, whether they have been paid or not. You can use either, but you must be consistent.

Make sure you take account of the 1% discount under the FRS too.

Thanks bubs, does it matter which you choose? Is there a prefferedone? Also the 1% discount only applys to the first year though doesn't it.

[sal626]

Maybe its different if you’re on the flat rate – I am not and was told it is one month after end of quarter by VAT office….

And yes, recently they changed it to payment clearing by deadline, rather then payment being received by deadline if paying by cheque.

[Clare@InTouch]

Thanks bubs, does it matter which you choose? Is there a prefferedone? Also the 1% discount only applys to the first year though doesn't it.

You can choose either - some people prefer cash based as it's better for cashflow, others like invoice based as it's easier to keep track of. The 1% discount is indeed for your first year of VAT registration (not flat rate registration, so if they differ make sure you're using the right anniversary).



sal626 - it's a month but they give you an extra 7 days if you file and pay online.

[Nixon Williams]

I would recommend setting up a direct debit payment, this will ensure that you meet the payment deadlines and not have to worry about the timing etc.

Of course you also get longer to pay, although at the moment this does not usually earn any extra money for you due to the very low interest rates.

[SimonMac]

I would recommend setting up a direct debit payment, this will ensure that you meet the payment deadlines and not have to worry about the timing etc.

Of course you also get longer to pay, although at the moment this does not usually earn any extra money for you due to the very low interest rates.

I assume that I would still need to tell HMRC how much to take so I don't see where the advantage would be

[SueEllen]

I assume that I would still need to tell HMRC how much to take so I don't see where the advantage would be

The advantages are:
1. You get interest on your money for the extra 7 days though with interest rates so low it makes little difference
2. You only have to submit your VAT calculations which saves a bit of time. I've had an occasion before when I've done my calculations went to pay via my bank account and found online banking down. So I had to go back onto the HMRC site and find their online payment part.

[Fred Bloggs]

I make an electronic payment from my account at Santander about 1 week before the end of the month when it's due. I just live a happier life knowing that HMRC got their money a bit earlier and hopefully, they're happy too in return.

[TheFaQQer]

I would recommend setting up a direct debit payment, this will ensure that you meet the payment deadlines and not have to worry about the timing etc.

Of course you also get longer to pay, although at the moment this does not usually earn any extra money for you due to the very low interest rates.

Whatever you do - don't set up a direct debit and then forget that you have one and end up paying it twice.

I don't know what kind of moron would make that basic mistake